Copper and Aluminum Rise as Expectations for a Fed Rate Hike Fade
Introduction: Metals Step Out of the Shadows
Monday. The London Metal Exchange opens the week with confident growth. Copper is rising for the third day in a row, interrupting a two-week losing streak that had made investors nervous. Aluminum continues to recover from a four-month low, adding another 0.5% and returning to levels that had seemed lost forever.
What has changed? The main driver is the shift in expectations regarding the Federal Reserve’s policy. Fed Chair Kevin Warsh said last week that price risks are declining. This became a signal for markets, which immediately reduced their bets on tighter monetary policy. And for industrial metals, which are highly sensitive to the macroeconomic backdrop, this came as a long-awaited relief.
Another factor is also at play — China. Funds in China are beginning to flow into shares and futures of metals producers in anticipation of solid first-half earnings. Several Chinese companies are expected to present preliminary results in the coming weeks, and the commodity rally, from gold to copper, is expected to support their profits compared with last year.
Copper is trading at $13,402.50 per ton, gaining 0.3%. Aluminum is at $3,107 per ton, up 0.5%. These are not spectacular figures, but they matter as a shift in trend. After weeks of decline, when metals were losing 1–2% per day, even a small gain feels like a victory.
Let’s break down what is really behind this recovery, why the Fed is changing its rhetoric, and how Chinese investors are influencing the industrial metals market.
The Fed: From Hawkish Rhetoric to Dovish Signals
Kevin Warsh Acknowledges Declining Price Risks
The key event that changed sentiment in metals markets was a statement by Fed Chair Kevin Warsh last week. He acknowledged that price risks are declining. This may sound like a technical phrase,...
